State Pension Plan Liabilities Likely to Worsen, Says Report

By ASPPA Net Staff • October 12, 2016 • 0 Comments
State pension plans’ unfunded liabilities are on track to grow to $1.75 trillion, says Moody’s Investors Service. The rating agency said on Oct. 7 that it expects state public pensions to grow by 40% to that amount through fiscal 2017.

By June 30, Moody’s says, the 100 largest U.S. public pension plans had funding of just under 70%. Further, it reports that those plans had:

  • investment returns of 1.31%;

  • a median 0.52% return on investments;

  • an average assumed return rate of 7.5%; and

  • a funding deficit of $1.38 trillion by the end of the first half of this year.

Moody’s reports that state pension plan liabilities have worsened since 2015, and by June 30 were $130 million worse than where the adjusted net pension plan liabilities stood by the end of last year. Not that 2015 was a banner year; according to Moody’s, half of the states failed to add funds to their retirement systems that are sufficient to stop those liabilities from growing.

The states’ record stands in contrast to the relatively good news that U.S. corporate pension plans got from Wilshire Consulting, Inc., which said that their overall funded ratio improved in September.